Florida Republican announces Financial Freedom Act in the U.S. House of Representatives

The Financial Freedom Act prohibits the U.S. Department of Labor from restrictions in Americans' self-directed 401(k) retirement plans.
The Financial Freedom Act prohibits the U.S. Department of Labor from restrictions in Americans' self-directed 401(k) retirement plans.

The Financial Freedom Act was presented to the U.S. House of Representatives this Friday by Rep. Byron Donalds, a Florida Republican, to prohibit the U.S. Department of Labor from restricting the kinds of investments that could be included in Americans’ self-directed 401(k) retirement plans. The measure is a companion to a Senate bill introduced by Alabama Senator Tommy Tuberville on May 5.

The Financial Freedom Act was presented in response to a March 10 compliance assessment from the U.S. Department of Labor (DOL) raising concerns about the incorporation of digital currencies in 401(k) retirement plans. 

As per the report, the Employee Benefits Security Administration of the Department of Labor “expects to conduct an investigative program aimed at plans that offer participant investments in cryptocurrencies and related products, and to take appropriate action to protect the interests of plan participants and beneficiaries with respect to these investments.”

Notably, in May, two U.S. Senators — Sen. Elizabeth Warren of Massachusetts and Tina Smith of Minnesota — wrote to Fidelity CEO Abigail Johnson to raise their voices against the 401(k) investment plan.

Fidelity Investments questioned the Department of Labor

Fidelity Investments, a financial services major, responded to the DOL report by objecting to what it perceived as unclear language and attitudes that went against the objective of the law that created the 401(k) program. It asked the Department of Labor to either clarify or withdraw the report. Fidelity joined a handful of smaller financial services organizations in giving Bitcoin to 401(k) plan participants two weeks later.

While responding to CNBC before the bill introduction, Tuberville stated:

“Whether or not you believe in the long-term economic prospects of cryptocurrency, the choice of what you invest your retirement savings in should be yours — not that of the government.”

In a tweet announcing the bill’s introduction, Donalds claimed that the DOL was limiting investors’ retirement account options and that the DOL report was part of the Biden government’s “a far-reaching and sweeping endeavor to centralize power in Washington.”